Global Plastic Compounding Market: Competitive Landscape
The prominent players in the global plastic compounding market are LyondellBasell Industries NV, SABIC, Borealis, INEOS Olefins & Polymers Europe, DowDuPont, BASF SE, Versalis S.p.A (Eni S.p.A), Asahi Kasei Corporation, Covestro AG, SO.F.TER S.r.l, 3M (Dyneon GmbH), LANXESS AG, and Total SA.
LyondellBasell Industries NV, DowDuPont, SABIC, INEOS Olefins & Polyolefins, and BASF SE, Versalis S.p.A (Eni S.p.A) collectively hold the majority share of the European plastic compounding market. The market players are focused on new product launches, product innovation, and strategic initiatives, such as acquisitions and joint venture, to meet the increasing demand for high-performance plastic in major end-use industries such as automotive, electrical and electronics, and packaging.
DowDuPont, a leading specialty chemicals producer, provides a wide range of polymer products such as LDPE, LLDPE, HDPE, and other polyethylene resins. The company has 534 manufacturing sites and operates through three business segments—material science, specialty products, and agriculture. The company is focused on expanding its production capacity of high-performance plastic on account of the increasing demand from the automotive industry. For instance, in 2018, the company invested around USD 40 million in its compounding facility in China to boost R&D activities and the production of high-performance plastic.
LyondellBasell Industries NV is renowned as one of the largest plastics, chemicals, and refining companies in the world. It operates through five segments—olefins and polyolefins-Americas, olefins and polyolefins-Asia, Europe and international, intermediates and derivatives, refining and technology. It is the leading manufacturer of polypropylene in Europe and the Americas. The company is focused on new product developments and the expansion of its polyolefins business. In February 2018, the company introduced a new enhanced polypropylene grade under the brand name Moplen HE745T for packaging applications. The new grade offers superior properties such as stiffness and impact performance balance.
INEOS Olefins & Polyolefins is one of the foremost manufacturers of olefins and aromatics. The company offers a variety of polyolefins, ranging from LDPE, LLDPE, HDPE, and m LLDPE to PP products. The company operates through four integrated sites and eight geographically advantageous sites throughout Europe, producing 5.5 million tonnes of olefins and aromatics and 3 million tonnes of polyolefins per annum. It serves numerous industries such as construction and durables, liquid food packaging and medical, films, advanced packaging, and export, distribution, and trading.
BASF SE is one of the largest chemicals producers in the world. The company operates through five business segments—chemicals, performance products, functional materials and solutions, agricultural solutions, and oil & gas. The company offers a wide range of high-performance plastic and organic pigments to serve the growing demand in major end-use industries such as automotive, electrical and electronics, and packaging. In 2017, the company began operations at its compounding plant in Schwarzheide, Germany, to meet the increasing demand for engineering plastic from end-use industries. This growth activity will result in the production of 70, 000 tons of polyamide and polybutylene terephthalate per year.
SABIC is a petrochemicals company that manufactures chemicals, fertilizers, plastics, and metals. The company operates through the petrochemicals, specialties, agri-nutrients, and metals segments. It has three technology centers and 12 manufacturing facilities in Europe. In 2018, the company introduced two new LDPE grades under the brand names SABIC LDPE HP0722 NDF and SABIC LDPE HP2022 NDF for cross-linked foaming processes. Also, it introduced a new portfolio of polypropylene compounds in the market for interior automotive parts. The new grades will provide excellent scratch resistance, good impact performance, and low shrinkage
Threat of New Entrants
A medium-low threat of new entrants is expected owing to the high capital-intensive nature of the market. The need for significant expenditure on research and development acts as a barrier for new entrants in the industry. There are also strict environmental policies in developed regions that place the economic burden on the manufacturer to comply with the stringent norms. Moreover, the market demands persistent product and process innovation along with efficient feedstock integration. The established companies in this sector have invested heavily in their production facilities. The market has witnessed alliances between regional players and big compounders to lower manufacturing costs. However, the rising demand for plastic compounds in numerous end-use industries is expected to provide lucrative opportunities to new entrants during the assessment period
Threat of Rivalry
The global plastic compounding market is projected to witness a moderate threat of rivalry, as each tier-1 player operating in this market has extended portfolios for various types of plastic compounds and is dedicated to offering quality products to end-use industries. Rivalry among firms has increased as more companies are competing for the same customers and resources. Furthermore, certain prominent manufacturers that have established brands in the market. However, competition is mostly based on the quality and price of the end product. Divergent nature of operations and differing cost structures of big and small firms are also expected to drive the internal rivalry and lead to price wars in the global plastic compounding market.
Moreover, companies such as Lanxess AG, DowDupont, and BASF SE are focusing on expanding their reach by opening new manufacturing bases in different locations to mitigate the threat of rivalry
Threat of Substitutes
The threat of substitutes in the plastic compounding market is moderate to low at present. In the packaging industry, there is a vast difference in the prices of metal and plastic containers, as well as differences in logistics and transportation as plastic is lighter than its substitutes and offers more advantages. Moreover, the weight and fragile nature of glass is another factor in the preference for plastic. In the electrical and electronics industry, there is no threat of substitution as there is no alternative for plastic in insulation or sheaths in cables. However, bio-based plastic is increasingly replacing conventional plastic as it is environmentally friendly.
Bargaining Power of Suppliers
The bargaining power of suppliers is projected to be low in the global plastic compounding market. There are several small firms in the market in various countries of Asia Pacific and they offered variety of differentiated products. On account of the wide applicability of plastic in every sphere, there is great demand. The market is dominated by players such as LyondellBasell Industries N.V., Total S.A., SABIC, KURARAY CO., LTD, BASF SE, DowDuPont, Lanxess AG, and 3M. However, there are a few established firms manufacturing bio-based plastic products. The switching cost from one supplier of bio-based plastic to another is moderate.
Bargaining Power of Buyers
The bargaining power of buyers is estimated to be moderate to high as more choices are available in the market. However, it depends on the nature of application and choice of product quality. Moreover, Automotive and Electronics industry has highest power as compared with construction, packaging and others due to scale of operations in the industries. For high-cost and good quality plastic compounding products, consumers do not have many choices between which they can switch.
